Anglo Leasing Scandle

From: Obeng Bash

Abuse thrives where systemic and ethical controls are weak. Anglo Leasing is merely the latest in a long series of abuses made possible by loopholes in the system. We are unfortunately, sure to hear of more, particularly given that this is an election year. At such times, as Kenyans know through painful experience, the hunt for resources to capture the political power which opens the door to the kingdom of economic success peaks, and all restraints are thrown off. Like Goldenberg before it, which took advantage of foreign exchange controls in order to outwit multilateral donors, the abuse of IOUs, irrevocable promissory notes (IPNs), was a loophole that presented itself to the devious minds that seem to populate our public institutions as a way to defraud the nation and avoid the restrictions being then imposed by the IMF. Reminiscent of the feeding frenzy that developed around Goldenberg, the use of IPNs on security contracts rose from KShs. 11.3 billion in 2001 to KShs.17.5 billion in 2003. The ratio of Anglo Leasing-type security contract debt to total external debt repayments increased from 2.9% in 2001/2 to 51.8% in 2004/5, only dropping to 35.9% in 2005/6.

That the NARC government, instead of immediately curbing this practice and punishing those responsible, eagerly seized on these criminal tricks and drove them to new heights is simply a sorry illustration of the reality that the members of the political elite are more united by their desire to abuse power to amass wealth than they are divided by any flashy PR “vision”. This is why it is necessary to institutionalise measures to make it more difficult for the corrupt to beat the system regardless of the government that happens to be in power.

Such measures should aim, first and foremost, at creating an enabling environment which makes it difficult for corruption to thrive by facilitating access to information and a general culture of transparency. This is essential for a citizenry which is informed and able to hold public officials to account. It stands opposed to the present culture of secrecy and mistrust of the public, to whom this information rightfully belongs. Legal reforms are essential, and there have been several new pieces of legislation introduced under the current government. Unfortunately we seem to excel at passing new laws which then go unenforced. The Anti-Corruption and Economic Crimes Act 2003 is one such as is the Public Officer Ethics Act which has been repeatedly transgressed against by public officials; most recently Amos Kimunya, when he misled Parliament and the public on the exact status of the Anglo Leasing irrevocable promissory notes.

The need for Parliament to take a greater role in the budgeting process to try and stem abuse by the executive has been stressed repeatedly. The Controller and Auditor General made several recommendations in his audit of the Anglo Leasing contracts which have also been pushed by civil society over the years for the involvement of Parliament in all phases of the security related budget, including the procurement process, priority setting and oversight.

He, and others, have suggested that the relevant Parliament Committee be sworn to secrecy in order to participate in the process. We need to keep in mind, however, that global advances in information technology and the associated explosion in easily accessible knowledge are rendering such precautions increasingly meaningless. In any case, it is not immediately obvious what is secret about a forensic laboratory apart, perhaps, from the intent to defraud. Therefore, secrecy on this type of procurement should be kept to the absolute minimum necessary for national security to reduce opportunities for malfeasance.

Again, the pace of implementation of these and other recommendations including those of the Public Accounts Committee is unsatisfactory. Kenyans cannot be sure that further abuses are not going on as government drags its feet or simply lies to avoid accountability. Parliament, on the other hand, has often been criticized for its indolence and outright negligence where its oversight duty is concerned. However, the Fiscal Management Bill presently before Parliament contains measures which will radically strengthen parliamentary oversight and scrutiny and increase executive accountability if it goes through. Government response will be taken as an indication of its commitment to a more open and accountable system that Permanent Secretary Kinyua assured the public of earlier this week.

In endemically corrupt countries such as ours, we are also dealing with a system of perverse incentives which sees those who should guard the national interest being most closely involved in subverting and deliberately weakening control systems for their own ends. This means that efforts to strengthen the national integrity system, which, on the face of it, should be welcomed by any government professing to be keen on reducing losses through corruption and associated failures of the system, founder time and time again. Bills with an anti-corruption import are even now being tabled in Parliament in a last minute rush to beat the deadline. Doubts are permitted as to the seriousness to really enforce them. Interestingly, we have not heard again of the oft-repeated commitment by government to pass an amendment to the Public Officer Ethics Act that would allow for public access to information on public officials wealth declarations. The lesson is that systemic measures to prevent corruption and any abuse must be anchored on a solid foundation of civic vigilance. Only intense and sustained scrutiny and questioning by the people and, ideally, their representatives, will enforce anything approaching accountability in this country and in most of Africa.

By way of illustration, in the last few weeks, Kenyans have been subjected to the unprecedented sight of a Minister of Finance coming out in public to wave what he purported were cancelled promissory notes at the press. Not long after that, copies of still valid promissory notes which had been tabled in Parliament by an opposition MP to disprove the Ministers claims, were being keenly studied and passed from hand to hand in Jeevanjee Gardens by concerned wananchi, who thoughtfully mouthed the words contained in the notes that gave the lie to the Minister’s brash claims of cancellation, “…. irrevocably and unconditionally, without protest or notification….”.

This week a group who have been leading the campaign to put Anglo Leasing back on the agenda, despite government attempts to submerge it, had the rare honour of a meeting at Treasury with the Permanent Secretary. Clearly, a nerve had been struck…. Without too much cynicism one might add that the meeting may also have presented a welcome photo opportunity for the IMF mission that is currently in town, along the lines of “Government engages with critical civil society…” Despite the attempts to allay our fears, concerns still remain.

Confronting us is the spectacle of a government whose records are in such a shambles that it does not really know for sure whom it owes and how much. In some cases, the government has been reduced to depending on honest creditors to inform them that the debts that government is continuing to pay have already been fully paid. What about the dishonest creditors? Its attempts to reassure us merely consolidate the impression of a massive conspiracy. We must be forgiven for not being prepared to rely on the government to fix its own mistakes without scrutiny or accountability.

The events of the past weeks show that the greatest guarantee of government accountability is an alert, critical and vocal public. This is the ultimate defence against the propensity to abuse public office for private gain.